A Chinese Man, A $50 Billion Plan And A Canal To Reshape Nicaragua

A family swims in Lake Nicaragua, which will encompass nearly half of the proposed canal's 172-mile route. Environmentalists worry that oil spills, pollution and dredging will destroy the country's largest supply of fresh water.

Francisco Telemaco Talavera gives a two-hour presentation to Nicaraguan farmers on the benefits of the canal. Telemaco is the rector of a major Nicaraguan University and head of the Gran Canal Commission. He says the canal will create up to 200,000 jobs and lift the country, the second poorest in the hemisphere, out of poverty.

Ligda Bol, 19 years old, sits in front of her small farm. Her house, near the Brito River, is in the path of the proposed canal. Her family hasn't been told if she'll be forced to move, when a decision will be made or how she will be compensated for her farm.

Santos Nicoya Bonillo stands in the dry Brito riverbed. Nicoya heads a farmer's cooperative in Tola, Nicaragua. The proposed canal route is set to start at the mouth of the Brito river on the Pacific Ocean. This is the third year of a major drought in southern Central America.

Carrie Kahn/NPR

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Originally published on August 15, 2014 10:54 am

One hundred years ago today, the first ship passed through the brand-new, U.S.-built Panama Canal; a century later, Panama owns the canal outright, and the country is one of the most prosperous in the region.

Panama's neighbor to the north, Nicaragua, is hoping a transoceanic canal and similar prosperity are in its near future. The government has joined forces with a Chinese billionaire to construct a 173-mile, interocean canal.

It may cost more than $50 billion, but the government says the mega-project is critical to lifting the nation out of dire poverty. Critics say the environmental and social damage will be irreparable.

Francisco Telemaco Talavera, the affable and outgoing leader of Nicaragua's prestigious National Agrarian University, is a perfect pitchman for the proposed Grand Canal. His rapid-fire, two-hour presentation on it is filled with jokes, hand gestures and dozens of slides.

"The canal will bring prosperity to all in this poor nation," says Telemaco, creating 50,000 jobs during the five-year construction period and 200,000 more once the canal is up and running. He also says it will turn Nicaragua — now the second-poorest nation in the hemisphere after Haiti, based on a U.S. estimate of its economic output — into the region's powerhouse, with economic growth rates as high as 14 percent a year.

But building the canal won't be easy, Telemaco says — if it were, someone already would have done it.

And others have tried: Throughout the past century and a half, a whole host of foreigners have signed contracts and drawn routes, but every plan evaporated.

The latest to put Nicaragua's canal dream on the map is 41-year-old Chinese billionaire Wang Jing, who is said to have amassed his fortune through his telecommunications business. Wang declined an interview with NPR but has said in public that he can raise the $40 billion to $50 billion needed for construction costs.

Some opponents of the canal worry that the financing will actually come from the Chinese government itself, which Richard Feinberg, a fellow at the Brookings Institution, describes as "the Chinese planting their flag right in the heart of the Western Hemisphere." But since winning a no-bid, 50-year, renewable concession last year, Wang has put the project on the fast track.

Too fast for Jorge Huete, a research biologist at the University of Central America in Managua.

"This whole thing has been rushed," he says. "There was not consultations, there was no debate. ... There should be someone defending Nicaragua."

Huete is most worried about the environmental consequences of dredging millions of tons of earth, ripping through the country's huge Lake Managua – the source of Nicaragua's fresh water — and plowing under indigenous communities in the path of the canal.

A group of leading national scientists wrote a letter to Nicaraguan President Daniel Ortega, demanding to see Wang-sponsored environmental studies supporting the project — which also includes a deep-water port on each coast, an international airport and free-trade and tourist zones.

Bol says that in the spring two Chinese men measured her land and took water samples from her well, but that no one has been back to tell her family if they have to leave or whether they'll be compensated for their land.

"People are also very worried about the beaches, and what happens if the diggers dig too deep and disturb the active volcanoes," says Bol.

There could be an eruption, and we will all be gone, she says. It was Nicaragua's active volcanoes and seismic activity that led the United States to select Panama for the site of the canal more than a century ago.

Canal proponents say those risks also are being assessed by internationally acclaimed companies. But despite scientists' demands, no studies for the project have been made public, and neither British environmental management firm ERM nor McKinsey and Co. — which is running economic feasibility studies — would comment for this article.

The government insists that a new canal is economically feasible, and often cites worldwide commercial shipping projections that even the expanded Panama Canal won't be able to handle.

But Jean-Paul Rodrigue, a global trade expert at Hofstra University, says those projections are exaggerated, and that it will be tough for investors to make a profit.

"It's going to take a lot of traffic and a very, very long time," he says. "That's why I say the project is technically feasible but commercially very, very dubious."

Those sorts of concerns have led some in Nicaragua to call the canal a cuento chino, a Chinese tale, but Manuel Coronel Kautz, a longtime adviser to President Ortega, insists it will be "a Nicaraguan dream."

"There will be a lot of criticism for this, we know that," he says, "but we also are revolutionaries, we are optimistics [sic]."

Kautz insists all studies will be made public sometime before December, when work on the canal will begin.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

A hundred years ago today, the first ship passed through the brand-new Panama Canal. It was 1914.

STEVE INSKEEP, HOST:

That U.S.-built canal was a leap for American commerce.

GREENE: It was an engineering triumph that became a big part of the American identity.

INSKEEP: And it was a major step in American Empire. As we'll hear in a moment, the U.S. actually worked to alter national borders to get the job done.

GREENE: It was such a classic imperial project that it is hard not to pay attention when another rising nation makes plans to build its own canal across Central America. A Chinese billionaire plans just such a project across Nicaragua. Here's NPR's Carrie Kahn.

CARRIE KAHN, BYLINE: Francisco Telemaco Talavera is perfect as the government's pitch man for the proposed Grand Canal, as it's referred to, in Nicaragua. He's the rector of one of the country's most prestigious universities and delivers a rapid-fire two-hour presentation full of jokes and impressive slides.

FRANCISCO TELEMACO TALAVERA: (Speaking foreign language).

KAHN: The canal will bring prosperity to all, says Telemaco. It will be built in five years and create up to 200,000 jobs, he tells a group of farmers.

TALAVERA: (Speaking foreign language).

KAHN: But, he adds, it won't be easy. If it were easy, he says, others would've already done it. Others have tried. Throughout the past century and a half, a whole host of foreigners have signed contracts and drawn routes cutting through the Central American nation. But none have materialized.

The latest to put Nicaragua's canal dream on the map is 41-year-old Chinese billionaire Wang Jing. He declined an interview with NPR, but in public comments, insists he can raise the needed $40 billion to $50 billion for construction. And since winning the no-bid 50 year renewable concession last summer, Wang Jing has put the project on the fast track - too fast for some in Nicaragua.

JORGE HUETE: This whole thing has been rushed.

KAHN: Jorge Huete is a research biologist at the University of Central America in Managua.

HUETE: There was no consultations. There was no debate. There should be someone defending Nicaragua.

KAHN: Huete is most worried about the environmental consequences of dredging tons of earth, ripping through Lake Nicaragua - the country's fresh water source - and plowing under indigenous communities in the path of the canal.

A group of leading national scientists wrote a letter to Nicaragua's president, Daniel Ortega, demanding to see environmental studies supporting the project which also includes two deep-water ports - one on each coast - an international airport and free trade zones. None of the studies, all paid for by Wang Jing's development company, have been made public.

What was publicized last month was the canal's finalized route. And it looks like it'll run right through Ligda Bol's small farm she shares with her husband and 2-year-old daughter. The farm is not far from the Brito River, which starts the Pacific Ocean, but is bone-dry now. Nicaragua is in its third year of a drought. Bol stirs rice over an open fire in her outdoor kitchen hut. She says no one has told them when they would have to leave or how they'll be compensated for their land.

LIGDA BOL: (Speaking foreign language).

KAHN: She says people are also worried about the area's beaches. And what happens if the diggers dig too deep and disturb the active volcanoes? They could erupt, and we will all be gone, she says. Canal proponents say all risks are being studied by internationally acclaimed companies, none of which would respond to request for comment. The government insists a new canal is economically feasible and often cites generous shipping projections. But global trade experts say such claims are exaggerated.

Meanwhile, opponents fear the financing won't have to come from investors but is coming directly from the Chinese government - a claim billionaire Wang Jing denies. Richard Feinberg of the Brookings Institution says a transoceanic canal would clearly be a major geopolitical thrust forward for China.

RICHARD FEINBERG: It would be the Chinese planting their flag right in the heart of the Western Hemisphere.

KAHN: Some in Nicaragua have come to call the canal a cuento chino - a Chinese tale.

MAUEL CORONEL KAUTZ: No. It is a Nicaraguan dream.

KAHN: Manuel Coronel Kautz heads the Nicaraguan Canal Authority. He's 81-years-old, a long-time member of the ruling party and one of a handful of advisers still close to President Daniel Ortega. He insists the canal is a reality and shrugs off the critics.

KAUTZ: There will be a lot of criticism for this. We know that. But we also are revolutionaries. We are optimistic.

KAHN: Kautz says all studies will be made public sometime between now and December. That's when groundbreaking of the Grand Inter-Oceanic Canal is set to begin. Carrie Kahn, NPR News. Transcript provided by NPR, Copyright NPR.